A corporation is resident in Denmark for tax purposes if it is incorporated in Denmark and registered in the Companies Register as having a Danish place of business. Further, foreign companies having their actual place of management in Denmark are also tax resident in Denmark. The actual place of management is typically the place where the management decisions concerning the company’s day-to-day operations are made.
Permanent establishment (PE)
Non-resident companies are liable to tax in Denmark on business profit if derived through a PE in Denmark. The existence of a PE is determined according to Danish tax law, which makes either a reference to a specific DTT or to text similar to Article 5 of the OECD Model Convention.
Denmark did not sign the multilateral instrument implementing BEPS action 7 regarding the new OECD definition of ‘permanent establishment’. The OECD definition of ‘permanent establishment’ from 2017 is thus not implemented in Danish tax treaties.
Recent case law shows that the Danish Tax Authorities are increasingly determining that a home office constitutes a fixed place in Denmark, and, as such, the foreign company has a PE based on this criterion.